If you want to grow a business, you may want to consider mergers and acquisitions. Doing so will enable you to expand your customer reach, lower your costs, acquire new talent, and more. However, some significant downsides are also associated with corporate mergers and acquisitions (M&As). Firstly, they are very expensive. Secondly, putting two companies together is very difficult and fails often. In fact, only around 50% of M&As end up in a success.
Making Sure Your M&A Is Successful
The biggest problem with M&As is that, for your workforce, it means some people will lose their jobs. After all, you don’t need two of everything. If, however, you can guarantee that there will be no redundancies other than voluntary ones, you will instantly boost morale and increase your chance of success. When employees are worried, production goes down. Furthermore, if it is known that redundancies are inevitable, people will often develop a ‘us against them’ type of mentality.
The two biggest obstacles in M&As are the fear of redundancies and the mixing of company cultures. One can often not be eliminated – the redundancies. After all, it is almost impossible to not have a few posts that are no longer needed. This is why, in order for your M&A to be successful, you need to organize this element as quickly as possible. If jobs are going to be lost, don’t make people wait for ages, wondering whether it is their job or not. Letting people go is difficult for everybody involved, but people are entitled to that clarity and they need a chance to rebuild their future.
The second element is company culture. The reason why so many M&As fail is because the company doing the buying wants to force the other company to integrate into their culture. This is never going to work. What you have to do instead is develop a new culture, one that fits with both original companies, so that they can truly become one.
How to Change Culture
Changing culture is perhaps one of the most difficult things to do. This is because it is invisible. You can’t measure or quantify it. As such, changing it is equally difficult. The way to achieve this, however, is by working together. Ask employees from both companies how they would define their existing culture, and ask them what they feel the strengths and weakness of their individual companies are. If you are lucky, the strengths of one of the entity will compromise the weaknesses of the other, thereby instantly changing for the better. More than likely, however, this will not happen.
Rather, you need to identify which strengths you feel are more important through consultation and giving everybody a voice. In so doing, you will create a new culture that is suitable for everybody involves and that merges the individual positives. A merger and acquisition is a financial business strategy, but it also literally means that two things have to merge, i.e. become one.